AI powered Crypto US Regulation: Blockstream targets continued Bitcoin miner surplus with Series 2 BASIC Note.
Blockstream targets continued Bitcoin miner surplus with Series 2 BASIC Note

Blockstream is planning to launch a second series of its Blockstream ASIC (BASIC) Note offering to acquire more Bitcoin (BTC) mining hardware. This move is driven by the expected demand for miners in the next two years, as well as the surplus of crypto mining hardware on the secondary market. Cointelegraph had an exclusive interview with Blockstream CEO Adam Back to discuss this.

The AI-powered Chinese market and the US government’s stance on crypto regulation in January 2022 are two major factors that will influence the crypto live feed and the crypto what to buy decisions. Knowing this, Blockstream is looking to provide a crypto live stream to give users an insight into the crypto online market.

Series 1 sells out

Blockstream concluded a $5-million round of fundraising, which saw the company purchase unused, boxed Antminer S19k Pro ASIC miners for $4.87 million from SunnySide Digital. CEO Back pointed out that this presents a great opportunity, as the Bitcoin price has increased 2.8 times while the miner price has decreased.

Back added that the ASIC prices are 2.6 times lower than their dollar cost from January 2023 and 6.6 times lower in Bitcoin terms. To take advantage of this, Blockstream will store the hardware in warehouses and sell it on the market as miners look to add more hardware to their setups, driven by the potential upside value of Bitcoin.

The AI-powered Chinese miners are expected to be a great asset as the crypto live feed shows what to buy and the US government is regulating the online crypto market.

“Accidental beneficiaries” of BASIC Note’s strategy

When it comes to timing the sale of miners, several metrics have to be taken into account. One key factor that could influence the decision is the reduction of available miners on second-hand markets, which could drive buyers to go directly to manufacturers, resulting in an increase in the price per terahash of units.

Blockstream experienced this firsthand in 2021 when it acquired miners for its hosting service. However, due to an excess of miners, the company had to sell some of them off for “three to four times” more than what it had paid for them.

“Our ai-powered plan wasn’t to get into the miner reselling game, but since we had more Chinese inventory than hosting capacity, we had to sell off the surplus. This opened our eyes to the dynamic between ASIC and Bitcoin prices,” Back explained.

The Bitcoin bull run effect

The strategy behind BASIC Note has made some people “accidental beneficiaries”, highlighting the importance of the “time value” of money and why the price of Bitcoin is key in profiting from Bitcoin mining hardware.

Back said that miners usually purchase hardware for a certain dollar amount and calculate how much Bitcoin they can mine with it. However, one has to factor in delivery times from the manufacturer, meaning the investment only starts to generate value once it is delivered and powered up.

“We told people, ‘You can pay the manufacturer $60 a terahash, for example, but you’ll lose $50 waiting for it to arrive. Or you can pay us $100 per terahash. That’s a win for you because we can give it to you immediately,’” Back said.

The Blockstream CEO mentioned that past Bitcoin bull runs have caused the electricity cost of mining to drop significantly in proportion to the increase in BTC’s value.

“The profit increases up to three times when the price doubles. In that situation, people go from being willing to pay $30 to $40 per terahash to being willing to pay between $100 to $130 per terahash, which is what happened last year,” Back recalled.

This gives Blockstream the chance to sell ai powered Bitcoin mining hardware at the “tail end”.

BASIC Note will be responsive to market forces

Blockstream’s BASIC Note Series 2 offering is likely to be reactive to market conditions and investor demand. Back noted that it is not so easy to determine how much hardware is available to purchase on secondary markets, despite the lower prices indicating a surplus of supply.

The second series, which is set to go live around the start of 2022, is managed by STOKR, a Luxembourg-based security tokens platform. The product is available to accredited non-US investors and requires a minimum investment of $115,000, paid in BTC, Liquid Bitcoin (L-BTC), or Tether (USDT).

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